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The zones of discrimination for M-Score is as such:
An M-Score of less than -2.22 suggests that the company is not an accounting manipulator.
An M-Score of greater than -2.22 signals that the company is likely an accounting manipulator.
Flextronics International Ltd has a M-score of -2.47 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Flextronics International Ltd was 1.33. The lowest was -6.65. And the median was -2.48.
The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Z-Score) or business trend (F-Score), M-score can be used to detect the risk of earnings manipulation. This is the original research paper on M-score.
The M-Score Variables:
The M-score of Flextronics International Ltd for today is based on a combination of the following eight different indices:
|M||=||-4.84||+||0.92 * DSRI||+||0.528 * GMI||+||0.404 * AQI||+||0.892 * SGI||+||0.115 * DEPI|
|=||-4.84||+||0.92 * 1.0124||+||0.528 * 0.8551||+||0.404 * 1.1513||+||0.892 * 1.1529||+||0.115 * 1.1724|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.902||+||4.679 * -0.0349||-||0.327 * 1.0018|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $2,895 Mil.|
Revenue was 6642.745 + 6723.934 + 7183.442 + 6410.106 = $26,960 Mil.
Gross Profit was 380.785 + 362.144 + 398.619 + 368.423 = $1,510 Mil.
Total Current Assets was $8,989 Mil.
Total Assets was $12,068 Mil.
Property, Plant and Equipment(Net PPE) was $2,255 Mil.
Depreciation, Depletion and Amortization(DDA) was $467 Mil.
Selling, General & Admin. Expense(SGA) was $866 Mil.
Total Current Liabilities was $7,233 Mil.
Long-Term Debt was $2,074 Mil.
Net Income was 173.887 + 42.975 + 145.157 + 118.205 = $480 Mil.
Non Operating Income was -44.009 + 38.544 + -29.486 + 0 = $-35 Mil.
Cash Flow from Operations was -81.169 + 98.153 + 764.549 + 155.182 = $937 Mil.
|Accounts Receivable was $2,480 Mil.
Revenue was 5791.125 + 5295.318 + 6123.321 + 6174.841 = $23,385 Mil.
Gross Profit was 311.035 + 195.657 + 246.462 + 366.772 = $1,120 Mil.
Total Current Assets was $8,228 Mil.
Total Assets was $11,169 Mil.
Property, Plant and Equipment(Net PPE) was $2,278 Mil.
Depreciation, Depletion and Amortization(DDA) was $574 Mil.
Selling, General & Admin. Expense(SGA) was $833 Mil.
Total Current Liabilities was $6,948 Mil.
Long-Term Debt was $1,651 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(2894.622 / 26960.227)||/||(2480.022 / 23384.605)|
2. GMI = Gross Margin Index
Measured as the ratio of gross margin in year t-1 to gross margin in year t.
Gross margin has deteriorated when this index is above 1. A firm with poorer prospects is more likely to manipulate earnings.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(362.144 / 23384.605)||/||(380.785 / 26960.227)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (8989.423 + 2254.664) / 12067.824)||/||(1 - (8228.468 + 2278.266) / 11168.924)|
4. SGI = Sales Growth Index
Ratio of sales in year t to sales in year t-1.
Sales growth is not itself a measure of manipulation. However, growth companies are likely to find themselves under pressure to manipulate in order to keep up appearances.
5. DEPI = Depreciation Index
Measured as the ratio of the rate of depreciation in year t-1 to the corresponding rate in year t.
DEPI greater than 1 indicates that assets are being depreciated at a slower rate. This suggests that the firm might be revising useful asset life assumptions upwards, or adopting a new method that is income friendly.
|DEPI||=||(Depreciation_t-1 / (Depreciaton_t-1 + PPE_t-1))||/||(Depreciation_t / (Depreciaton_t + PPE_t))|
|=||(573.724 / (573.724 + 2278.266))||/||(466.993 / (466.993 + 2254.664))|
6. SGAI = Sales, General and Administrative expenses Index
The ratio of SGA expenses in year t relative to year t-1.
SGA expenses index > 1 means that the company is becoming less efficient in generate sales.
|SGAI||=||(SGA_t / Sales_t)||/||(SGA_t-1 /Sales_t-1)|
|=||(866.088 / 26960.227)||/||(832.876 / 23384.605)|
7. LVGI = Leverage Index
The ratio of total debt to total assets in year t relative to yeat t-1.
An LVGI > 1 indicates an increase$sgai= in leverage
|LVGI||=||((LTD_t + CurrentLiabilities_t) / TotalAssets_t)||/||((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)|
|=||((2073.854 + 7233.212) / 12067.824)||/||((1650.536 + 6947.726) / 11168.924)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(480.224 - -34.951||-||936.715)||/||12067.824|
An M-Score of less than -2.22 suggests that the company will not be a manipulator. An M-Score of greater than -2.22 signals that the company is likely to be a manipulator.
Flextronics International Ltd has a M-score of -2.47 suggests that the company will not be a manipulator.
Altman Z-Score, Piotroski F-Score, Accounts Receivable, Revenue, Gross Profit, Total Current Assets, Total Assets, Property, Plant and Equipment, Depreciation, Depletion and Amortization, Selling, General & Admin. Expense, Total Current Liabilities, Long-Term Debt, Net Income, Non Operating Income, Cash Flow from Operations
Flextronics International Ltd Annual Data
Flextronics International Ltd Quarterly Data